Page 18 - FY 2020-21 Revenue Outlook

include additional tax revenue from the reassessment of sold homes and
investment in business equipment, assume lower growth assumptions
considering a possible recession. Refund and redemption activity are
budgeted to remain flat.
 Property tax increment revenue from the former CRA/LA proves difficult to
project due to the receipt of additional surplus property sales revenue,
negotiated settlement payouts, and adjustments to recognized obligation
payments. As current year tax increment growth was lower than
estimated, similar low growth for tax increment receipts is assumed for
2020-21. Receipts from the sale of surplus properties are expected in
2021-22.
 Departmental receipts are dependent on policy decisions to increase
departmental fees, collect full overhead cost reimbursements and
reimbursements from other agencies. Related cost reimbursements are at
risk if vacancy rates for special fund and proprietary reimbursed positions
exceed rates assumed in the budget. License, permit, fees and fines
receipts are also at risk if full service levels are not restored at the
conclusion of the current Safer at Home order, if a subsequent order is
required, or if the estimated $3.8 million in 2019-20 delayed receipts are
not recovered.
 The electricity users tax estimate for 2019-20 and 2020-21 are provided
by the Department of Water and Power (DWP) and are based on the
June 2018 load forecast updated for current year billings. At the time of
budget formulation, DWP had yet to revise its estimates to reflect the
potential impact of the pandemic on electricity usage, so the lower range
estimates are assumed.
 Business tax estimates assume a decline in annual tax renewals for non-
cannabis related business activity on par with previous recessions.
Monthly tax remittances for cannabis-related business activity assumes
high-growth unimpacted by the pandemic. Both categories assume the
City is able to recover the estimated $44.7 million in 2019-20 tax receipts
that were impacted by the Civic Center closure and deferred tax collection
efforts.
 Sales tax revenue is assumed to decline based on estimates provided by
the City’s sales tax consultants. Subsequent to the formulation of this
estimate, the State extended the due date for the payment of quarterly
sales tax owed by businesses. For qualifying businesses, payment of the
tax obligation may be extended over a 12-month period. The maximum
potential impact of this deferral is $95 million, but number of businesses
taking advantage of deferral is unknown. Quarterly sales receipts are
remitted by the State to the City over a 3-month period. The reduction to
City receipts will be first realized before the close of 2019-20 and the
impact from extended payment periods would continue until 2021-22.
 Transient occupancy tax revenue assumes a double-digit decline in
receipts that exceed those of the Great Recession or the dotcom and
concurrent September 11 terrorist attacks. Slow recovery is also assumed,

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